CAW strike threat has improved tenor of talks: sources

The Canadian Auto Workers’ threat to walk off the job at all three Detroit automakers if a deal cannot be reached by next week’s deadline has led to more constructive dialogue with General Motors and Ford over the past week

The Canadian Auto Workers’ threat to walk off the job at all three Detroit automakers if a deal cannot be reached by next week’s deadline has led to more constructive dialogue with General Motors and Ford over the past week. But those with knowledge of the situation say Chrysler has dug in its heels, refusing to budge from its initial position.

The Detroit Three have shown a united front thus far in the CAW talks, attempting to address the discrepancy in compensation between U.S. and Canadian workers.

The union said in a leaflet distributed to its membership Monday the Detroit Three continue to seek “dramatic changes” in their contracts, including implementing two-tier wages, eliminating cost of living increases, moving new hires into a cheaper defined-contribution pension and eliminating its so-called 30-and-out pension.

At the same time, the union said none of the Detroit Three are committing to any new investment, which the CAW argues puts its members’ jobs in jeopardy.

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“All three bargaining committees are determined to reject these demands and reach a fair deal with General Motors, Chrysler and Ford,” the union told its membership. “A week from the deadline, anxiety levels are understandably high and rising.”

But a sliver of hope has emerged in the talks that a target could be identified or a deal met with at least one automaker ahead of the strike deadline of 11:59 p.m. Sept. 17.

“Since we announced the potential of taking out all three companies there has been more constructive conversations. But that hasn’t led to results,” said Ken Lewenza, CAW president, in an interview Monday. “A couple of the companies are being a little more constructive.”

While he would not comment on which of the automakers was digging in its heels, those with knowledge of the situation said Chrysler is taking the hardest line.

Chrysler, which is in the most precarious financial position, took a hard line in the U.S. talks last year before a deal was struck with GM, forming a pattern for the other two.

The fact that the CAW’s talks have turned more constructive with GM and Ford raises the possibility a deal could be struck with either before the strike deadline.

When the automakers get over their overzealous demands, we can probably get a deal. But if they don’t, we have a problem

Mr. Lewenza said it was too early to say whether that would be possible. But he believed if any of the Detroit Three softened their stance, a deal could be reached quickly.

“When the automakers get over their overzealous demands, we can probably get a deal. But if they don’t, we have a problem,” he said.

The threat of a strike at the Detroit Three’s Canadian operations would have a significant impact on the country’s economy, particular in Ontario, said Carlos Gomes, Scotiabank senior economist. He said if the CAW were to shut down their Canadian operations, it would reduce Canada’s gross domestic product by 0.6% on a month-to-month basis.

“That would represent the sharpest monthly decline since March 2009, when the global economic downturn was in full force,” Mr. Gomes said.

The Detroit Three have accounted for 61% of the motor vehicle assembly in Canada so far this year, he said. If the CAW were to shut down the Detroit Three’s plants in Canada, excluding GM’s Ingersoll, Ont. plant which is not part of the talks, it would also lead to a 30% drop in auto parts production for the duration of the strike, Mr. Gomes said.

Both GM and Ford produce engines and other components in Canada that are used in vehicles produced in the U.S., said Kristin Dziczek, director of the labour and industry group at the Center for Automotive Research. “It’s that kind of ripple effect that makes [the threat of a strike] more impactful,” she said.

Brad Duguid, Ontario minister of economic development and innovation, would not speculate on what the government may do in the event of a strike with the talks ongoing.

“This solution has to be found between the workers and the companies,” he said. “It’s really not a solution that government would have any desire to speculate on.”